As the Cannabis industry continues to grow, so does the demand for reliable, reliable, reliable information to help guide your business. Particularly for new businesses, understanding the basics of retailing is critical, as well as how to reach the people who will buy your products.
Although cannabis legalization is a hot topic right now, many people still don’t know how the cannabis market can implement common retail practices to boost sales. We can hear all of you skeptics saying: “You can’t sell cannabis like you sell any other product. It’s illegal and you can’t touch it.” It may be true, but that doesn’t mean we can’t learn from the way other industries sell their goods.
The retail market for medical and recreational cannabis is changing quickly. Most of the major chains are doing their best to get on board with the industry’s new status quo, but there are still many challenges to overcome. One of the most pressing issues is how to find products that are both useful and appealing to consumers.. Read more about cannabis sales strategies and let us know what you think.
Three excellent strategies for boosting income and staying ahead of the competition.
As the cannabis market in North America grows more competitive, merchants are finding themselves with flat or decreasing sales. For owners, this is terrible news, but it isn’t always the end of the world. Creative entrepreneurs are always on the lookout for new ways to make money, and such ideas are often buried in plain sight in other retail sectors.
Let’s take a look at three typical retail practices that have yet to become part of the cannabis market’s DNA.
Shelf space is limited.
Charging money for premium placement of specific goods and brands on shop shelves is one of the most effective methods to boost sales. You’ve arrived in the realm of slotting fees.
This may seem to be a niche part of the retail industry, yet it is a significant source of income for merchants across the board. In fact, according to the American Journal of Agricultural Economics, grocery shops profit more from fees paid to manufacturers and distributors than from sales. It’s difficult to identify a retail sector where this doesn’t happen; the New York Times revealed in 1996 that big chain bookstores were participating in similar tactics. In fact, according to a study released by Goldman Sachs in 2015, consumer goods firms pay shops more than $200 billion in placement fees each year.
Slotting fees (sometimes known as “fixed trade expenditure”) have a straightforward economics: Customers are more likely to purchase goods that are prominently exhibited than those that are put in unremarkable areas of a shop. Snack food businesses spend thousands of dollars to set up special end-cap displays laden with bags of chips, knowing that customers would pick them up as impulse buys on their way to acquire milk and bread. They also pay a premium to have their goods displayed at eye level, which results in substantially higher sales than being on the top or bottom shelf.
While this is a widespread practice in conventional retail, it has yet to become a factor in North America’s legal cannabis retail sector. The present legal scheme’s ambiguity, according to Mark Cavdar, vice president of business development at Alberta-based Nova Cannabis Inc., causes confusion for merchants about what is and isn’t permitted.
“When it comes to any kind of marketing for cannabis goods by manufacturers, the rules in Canada are quite tight. The rules are considerably stricter than those for alcohol, and are approximately comparable to those for tobacco,” he adds. “Cannabis shops find themselves in these ad hoc discussions with sales representatives promoting new and unproven goods and brands because of the uncertainties surrounding trade agreements. Ordering choices are therefore decided based on what is displayed in a catalogue, rather than what consumers have requested. This harms the legal sector by burdening merchants with unsold inventory and delaying the development of legal market brands that provide consistent product experiences to customers.”
At-store promotions are another frequent technique in many retail shops. If you’ve ever gone to Costco on a Saturday, you’ve probably been approached by individuals handing you tiny plastic cups containing anything from Albanian cereal to smoked cheese lumps to alpaca pâté prepared by Wisconsin monks. You may get a thimbleful of mystery wine if you’re very fortunate. What causes all of this? Because it facilitates goods movement.
“When customers walk up to a sampling station and really meet a salesperson, they have an instant connection to the product, even if they weren’t intending on purchasing it,” says Michael Albert, a food industry veteran who has sold everything from tea to gelato in Costco and other big-box shops. “It’s not so much about the goods as it is about the human contact,” says the entrepreneur. It’s far simpler to stroll by a product on the shelf than it is to tell a lady cutting hot dogs on an electric grill that you don’t want them.”
Obviously, most jurisdictions prohibit the distribution of free cannabis samples, but that doesn’t mean that merchants can’t provide good personal experiences for their customers. This is where branded swag, such as stickers, clothing, and pens, may help merchants promote certain goods in their shops, even if they aren’t giving them priority shelf placement.
Shopping for oneself
Top shops from Louis Vuitton to Harrods provide personal shopping services, which is one of the fashion world’s trademarks. In general, these are invitation-only events reserved for high rollers, but getting on the schedule is surprisingly simple. Why do shops provide services like this? Simply stated, they boost sales significantly.
In many respects, it’s like the fox guarding the henhouse in retail: customers voluntarily stroll the floor with an expert whose only job is to persuade them to purchase more stuff.
“Imagine a person coming into a store to purchase a new skirt; personal shopping can transform that garment into an outfit,” says NPD Group retail researcher Marshal Cohen.
In fact, Lane Crawford, a Chinese apparel retailer, claims that its sales are 400 percent greater than the industry average because more than half of its clients prefer to engage with a company-employed personal shopper.
Personal shopping has been around for decades, if not centuries, but it just become popular in the past two years, according to Bloomberg. One of the main reasons for this is because internet applications have made it simple for consumers to book appointments without having to contact the shop. Furthermore, the pandemic has altered how consumers engage with shops, and smart store owners realize that the human connection is now more important than ever in generating sales. It’s no surprise that Nieman Marcus intends to quadruple its personal shopper workforce by next year.
Personal shopping enables businesses to get important data about customers in their shops in addition to increasing revenue per customer. Merchants may monitor broad trends, but the personal shopping experience enables them to gather specific data that can be used to create future plans for anything from staffing to merchandising to product selection.
Matchbox Cannabis owner Tatyana Parkanskaia says, “One of the greatest things about the pandemic limitations being removed here in Ontario is that we can now provide concierge service, which was our goal from day one.” Parkanskaia spent more than a decade running a shoe shop in Toronto’s West End, and she’s now applying her knowledge to the Matchbox cannabis businesses.
“It’s all about the human connection in retail. It’s not enough to just provide shoes for customers to purchase. You must understand their tastes and requirements,” she explains. “This holds true regardless of what you’re offering. That’s why, even if they aren’t permitted to sample goods in shops, consumers can go to our website and schedule a one-on-one meeting with one of our budtenders. That’s how we can learn so much about our consumers, both individually and collectively.”
So, what’s next?
In both Canada and the United States, the cannabis retail sector confronts an unclear future. Because many cannabis products are still illegal on a federal level in the United States, dispensaries often find themselves operating in a murky area when it comes to everything from banking to taxation. Furthermore, federal and provincial regulations restrict how shops may advertise goods to their consumers in Canada.
Stores may implement best practices that will help them increase sales and remain ahead of the curve by taking inspiration from other retail sectors.
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